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Farfetch reports strong sales growth as shoppers turn online to buy luxury goods – and narrowing pre-tax losses

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Farfetch's concept of the store of the future (Image courtesy of Farfetch)
Farfetch's concept of the store of the future (Image courtesy of Farfetch)
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Farfetch reports strong sales growth as shoppers turn online to buy luxury goods – and narrowing pre-tax losses

Farfetch has reported strong growth in sales as more shoppers turn online and to their smartphones to buy luxury goods – while pre-tax losses narrow.

 

The luxury retailer and platform, which provides boutiques and luxury brands with ecommerce and multichannel capabilities, says it’s now seeing a “paradigm shift in favour of online luxury” and that Farfetch is enabling luxury customers and brands to take part in that shift. It said that active customer numbers grew by 45% during the third quarter of its financial year, while app downloads grew by more than 70% compared to the previous year. Farfetch said its app was “increasingly becoming a preferred channel for consumers” - and new iOS and Android apps were launched in China, with a more localised experience.

 

The company today said it had enabled brands to sell goods with a gross merchandise value (GMV) of $798m (£596.5m) in the third quarter of the financial year – 62% more than at the same time last year. Its own revenue rose by 71% to $438m (£327.4m). But it reported a pre-tax loss of $90.6m (£67.7m) in the three months to September 30 – an improvement from a loss of $534.1m (£399.1m) a year earlier.

 

Farfetch said sales grew in its top five markets and in across all the regions it serves, from the Americas, to Europe, the Middle East, and Asia. Average order values recovered to a 1% year-on-year decline, from an 18% YOY decline reported in the previous quarter. The change came as shoppers bought more full price goods, although they did so in lower-price categories.

 

During the quarter, the retailer added new e-concession partners including Moncler, Dolce & Gabbana and Ralph Lauren, and improved its shipping capabilities and final mile delivery in select markets. In Germany and the Middle East, for example, it is piloting ParcelLab customer communications to let shoppers know where their order is, from checkout to delivery and returns.

 

New innovations included a virtual sneaker try-on simulation on its app. Meanwhile, its platform division replatformed websites for retailers including Palm Angels.

 

Farfetch, ranked Top250 in RXUK Top500 research, recently announced a global partnership with Alibaba and Richemont to supply retail technology to luxury brands as they upgrade their digital presence, and to help them sell to the growing Chinese market. As part of that, Farfetch will launch luxury shopping channels on Tmall Luxury Pavilion and Luxury Soho, while partner Artemis will invest $1.15bn into Farfetch and the new Farfetch China joint venture.

 

José Neves, founder, chairman and chief executive of Farfetch, said the quarter had been a record one for the retailer.

 

“What we are seeing is the acceleration of the secular trend of online adoption in luxury – an industry that is still very underpenetrated,” he said. “The capabilities developed across the Farfetch platform over the past 13 years in anticipation of the eventual digitisation of the luxury industry uniquely position Farfetch to capture this opportunity today. And our recently announced partnership with Alibaba and Richemont further position us to seize the opportunity to bring the luxury industry into the next generation and drive sustained growth and market share for many years to come.”

 

The shift online has been driven in recent months by the Covid-19 pandemic and lockdowns around the world that have seen non-essential retail shops close. Many see this as an acceleration of a shift that would have happened anyway but more slowly.

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